Tokyo: Japan is beginning to feel the economic pressure of China’s growing travel boycott, which has sharply reduced the number of Chinese visitors entering the country amid escalating diplomatic tensions. The dispute, rooted in comments made by Prime Minister Sanae Takaichi about a possible Chinese attack on Taiwan, has quickly evolved into a wider economic and cultural standoff.

Tour operators across Japan report a sudden and steep decline in bookings from China. One Tokyo-based travel company said it has lost nearly 80 per cent of its year-end group reservations from mainland China and Hong Kong.

Airlines have also felt the impact, with Chinese carriers offering refunds for Japan-bound tickets through December. Analysts estimate that as many as 500,000 flight bookings have already been cancelled.

Chinese tourists normallymake up one of the largest segments of Japan’s inbound travel market. In recent years, visitors from mainland China and Hong Kong have accounted for roughly a quarter of all foreign arrivals, providing a major boost to the retail, hospitality and entertainment sectors. Tourism, valued at around 7 per cent of Japan’s GDP, is now under threat as the boycott widens.

The economic hit is already showing. Shares in Japanese tourism, hospitality and retail companies have dropped sharply. Major department store chains, theme parks and travel operators have all recorded notable declines as fears mount that the travel freeze could last for months. Analysts at the Nomura Research Institute estimate that Japan could face losses of up to 2.2 trillion yen, or roughly 14 billion dollars, annually if the boycott continues.

The rift has spilled into cultural and business exchanges as well. China has suspended the release of Japanese films, cancelled cultural programmes and reduced official interactions.

Japanese nationals living in China have been warned to remain cautious after online criticism and rising anti-Japan sentiment.

Japanese diplomats have attempted to de-escalate the situation. A senior envoy was sent to Beijing earlier this week, but China has insisted that Prime Minister Takaichi retract her remarks, a demand Tokyo has rejected. Japanese officials maintain that the prime minister’s comments reflect Japan’s position on regional security.

Businesses are urging both sides to stabilise ties, saying that prolonged political tension could damage not only tourism but also trade and investment flows. Senior corporate leaders warn that Japan remains heavily connected to China through supply chains and consumer markets, making swift diplomacy essential.

Regional observers say the dispute underscores the wider strategic competition over Taiwan and highlights how quickly geopolitical disagreements can spill into economic pressure. While Japan seeks diversification in its tourism and trade networks, China continues to use travel and cultural channels as tools to signal dissatisfaction without resorting to full economic sanctions.

For now, both tourists and businesses are caught in the middle. Many in Japan worry that unless diplomatic efforts gain momentum, the slowdown in travel could extend into the New Year and beyond, deepening economic pain at a time when the tourism industry is still recovering from years of global disruption.